Over the past decades, the percentage of elderly individuals who receive annual influenza immunization has increased dramatically, from 20% in the late 1970s, to over 65% in 1996. In spite of this dramatic increase, the rate of hospitalization for pneumonia and influenza (P&I) among fee-for-service Medicare beneficiaries has not decreased, and has in fact increased fairly consistently from 15.5 per 1000 beneficiaries in 1986 to 20.1 per 1000 in 1996. This observation challenges the 40%-70% protective effect of influenza immunization against P&I hospitalizations detected in several recent, large scale studies. Because it is biologically impossible for influenza vaccines to cause pneumonia or influenza, other factors must account for this paradoxical relationship. The purpose of this study is to discover these other factors. The following research questions will be explored: 1. What immunological factors--including low vaccine efficacy, poor virus-vaccine match, and poor targetting of at-risk individuals-- account for the apparent anomalous relationship between influenza immunizations rates and hospitalization rates for pneumonia and immunization? 2. Does favorable selection of Medicare beneficiaries into managed care organizations play a role in the paradoxical increase in P&l hospitalizations in the fee-for-service sector? 3. Do health care market factor-such as reduced hospital censuses and" managed care "spill-over" effect-help explain the paradoxical increase in P&l hospitalizations?